Thousands of homeowners will be getting relief soon if they took out a loan with Countrywide Financial before 2008. Charges against Countrywide, now a subsidiary of Bank of America, are part of the largest mortgage-servicing case ever to come before the Fair Trade Commission (FTC), and one of the largest overall judgments. The New York Times reported that Bank of America will pay $108 million to families who were charged inflated “cost of service” fees such as lawn mowing and property inspection.
Over the past few years, Countrywide has become the poster child for the predatory lending industry and has received much of the blame for the housing crisis. Reports of abuses include the inadequate underwriting of adjustable rate mortgages or ARMs, unhelpful customer service, abysmal record keeping, abusive origination fees, and making false and defaming claims against homeowners who filed for bankruptcy protection.
As part of the monetary settlement, the FTC is requiring Bank of America to establish internal procedures and to use an independent third party to verify that bills and claims filed in Countrywide’s ongoing bankruptcy proceedings are valid. Countrywide also faces a criminal investigation by the Federal Fraud Enforcement Task Force into the defamation charges against it.
Unfortunately, Countrywide is only one of many lenders accused of predatory lending and consumer abuses. Although the FTC has played an integral role in holding Countrywide accountable, these predatory practices still abound in the mortgage industry. We need strong laws that protect consumers; that is why the Shriver Center supports an independent consumer protection agency which will prevent these abuses from happening in the future.
For more information contact the Community Investment Unit at the Shriver Center.
This article was co-authored by Susan Ritacca.